Essential Insights, Expert Voices: The evolution of payer-provider partnerships

· 8 min to read

Featuring Greg Baumer and Dr. Jennifer Terrell, naviHealth

As the healthcare world continues to embrace innovative value-based care models, provider-payer partnerships have become a driving force of change in the industry. What players and factors have shaped this trend? And how will these collaborations transform the future of care?

In this series, several leading healthcare experts will answer these questions and offer examples of how these evolving collaborations are already impacting care across the U.S.

The Past: A Surfacing Trend, or Just a Reemergence?

Greg Baumer

According to Greg Baumer, Chief Growth Officer for naviHealth, provider-payer partnerships aren’t actually a new thing, but are simply re-emerging in prevalence. “In the 80s, it was very common for payers and providers to aggressively share risk with each other, and to that end, we saw large physician groups popping up all over the country,” Baumer says.

But over time, challenges in managing risk caused many of these groups to incur significant losses, forcing them to either shut down or convert back to more traditional fee-for-service models.  “With less sophisticated IT systems, payers and providers were not able to effectively share data with one another or track and measure performance,” says Baumer.

The Present: Why Payers and Providers Are Aligning Again

Dr. Jennifer Terrell, Senior Medical Director for naviHealth, agrees, and believes the sophistication of today’s technology has made data sharing the key driver of the success of provider-payer partnerships in today’s healthcare market.

“Sharing data has exposed a pretty big blind spot,” Dr. Terrell says. According to Dr. Terrell, siloed providers were missing out on the patterns payers could see—like frequent readmissions between health systems and differences in quality among health systems and post-acute care providers.

Jennifer Terrell

“Greater data transparency has enabled providers to see beyond their own walls and capitalize on ways to lower costs and improve outcomes.” says Dr. Terrell. “They are also able to see compatible areas of expertise [with payers]—provided their corporate structures could cooperate fully,” she adds.

As these partnerships reappeared over the past decade, Baumer says the greatest increase in risk sharing with providers has developed in the last two to three years—and for two main reasons.

First, he says, payers went through a phase of thinking the right strategy was having as broad a network of providers as possible. But with such expansive networks, payers were losing control and influence with providers because each one had only a tiny slice of the volume. “Sharing risk now fosters a tighter alignment on incentives,” says Baumer.

Second, recent changes in health care have pushed providers and payers to generate medical cost-savings in different ways: in particular, through managing the care of patients with chronic conditions, and doing so outside the walls of the hospital. This has fostered alignment of incentives especially with the gatekeepers of managed care settings like post-acute care facilities and outpatient care, says Baumer.

Are bundled payments driving these new risk arrangements and provider-payer alignment? Not yet, says Baumer. On the whole, risk sharing is happening at either the population level—i.e., for these 10,000 members, the provider will take risk on all of the care for all 10,000 members—or in a bundle, he explains. In a bundle, the provider takes risk on a given episode of care—for example, a patient’s hospital stay and all care incurred during the 90 days that follow. “The former is currently much more common than the latter,” says Baumer.

The Future: Why the Bundled Payment Model Is Growing

But Baumer affirms that bundled payment models are growing rapidly – particularly for elective procedures in areas such as orthopedics and cardiac care—thanks to the ability to hone in on specific savings levers within a given episode of care. Conversely, bundles are less effective in managing chronic conditions, where the challenge is to prevent hospital admissions in the first place, per Baumer.

Dr. Terrell believes bundles are most effective where high variances in practice patterns are prevalent. But this approach isn’t brand new either, she adds. “I think bundles were an accelerator of something that’s been brewing for a while,” says Dr. Terrell. “People have been looking at variation across settings for decades, but it really came into focus in the late 90s,” she says. “It’s prime real estate to look at partnerships that way, because you can look at a physician group that operates under two different hospital systems and find ways both can win by partnering together and limiting variation.”

Nuts and Bolts: The Challenges and Benefits of Provider-Payer Partnerships

Sharing data and fostering communication between two large organizations which have historically been at odds represent the biggest challenges for these collaborative partnerships, says Dr. Terrell. But within this challenge lies perhaps the greatest benefit: the sophistication of modern IT departments offers a tremendous advantage in overcoming these barriers and moving towards greater future opportunities, per Dr. Terrell.

Moving these sophisticated systems to synchronization does require a significant amount of time and change management though, as current partnerships have recently discovered, says Baumer. “Many organizations thought that once you had the data in place, change would just occur,” he said. But such a seamless shift isn’t the reality, especially given the decades-long history of competition among these organizations.

Dr. Terrell and Baumer agree: Becoming true partners requires establishing trust and cooperation where there once was none, a critical but enormously time-consuming feat. “There’s some corporate memory to overcome,” says Terrell.

Financial savings opportunities for payers—with an upside for the provider—represent another key benefit to these partnerships, says Baumer. As trust between these once-at-odds organizations continues to develop, the foundation should also lead to better alignment—and hopefully, better collaboration—between payers and providers.

But perhaps the most important benefit, per Baumer, which offers a win for all involved? Improved patient outcomes. And these improved outcomes ideally represent a domino effect: To the extent that the payer and all the providers are better aligned, says Baumer. What follows should be better care decisions, better choices about which providers the patients see in the first place, better care transitions (a huge piece of the quality care discussion), and ultimately, better follow-up to prevent readmissions.

So Where Are We Headed?

It is highly likely that provider-payer partnerships will continue to proliferate, says Baumer. But what would he like to see on the innovation side? Payers engaging directly with patients in bundled payments, and even three-way (patient, provider, and payer) communication on the cost of an episode of care—which again, would likely be most valuable for elective procedures.

Dr. Terrell believes big employers will play a role in the future of provider-payer partnerships. “If they can get people better faster, they can decrease healthcare provision costs,” she explains. Not everyone will jump in here, but for those employers already partnering with large systems like the Cleveland Clinic, for example, the benefits are clear, the alignments make sense.

But as systems align and partners pair off, what will happen to post-acute care providers (PACs)?

“When a system owns their continuum of care and the system is aligned with a payer, they really do have more control over utilization,” says Dr. Terrell. “By getting patients to the appropriate level of care, PACs are better able to absorb the decrease in utilization.” There’s less concern around patient volume when you have the full spectrum of care available and more flexibility regarding post-acute care settings following a hospital admission. A patient’s care is shifted to a more appropriate setting, such as a SNF rather than IRF, as opposed to being shifted completely out of a particular hospital system.

This goes back to the “blind spot” of pre-data-sharing days, according to Dr. Terrell. “It never occurred to payers to consider a PAC provider as an important key driver for a patient’s well-being and outcomes,” she says. “That wasn’t a concept until approximately five years ago, but now, we can show a payer’s value in helping providers have better outcomes at a lower cost.”

When the health system owns PAC facilities, it really compels the payer/physician group to collaborate on forming high-performing networks of PAC facilities—which is new, according to Baumer. “More systems care about that in the last few years,” he says. “And it’s good to see the payer helping hospital think through finding the provider that offers the best post-acute care for the patient.”

Better care and better outcomes at a lower cost: no matter who partners with whom, and no matter what systems align, this goal of the current VBC shift is one we can all support.

Stay tuned for upcoming Essential Insights discussions with Marilyn Denegre-Rumbin, Director, Payer & Reimbursement Strategy at Cardinal Health, and Janet Tomcavage, RN, MSN, and Chief Population Health Officer for Geisinger Health System.

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